Has Aviva found the solution to the insurance industry's problems?

Everybody hates having to shop around for their insurance year In year out. And when you’re filling in the questions, it’s hard not to feel that you’re stepping through a minefield. Get an answer wrong, and it could invalidate your whole policy.

Comparison sites have been both friend and foe in the way the industry has evolved. By giving customers more choice than they ever wanted, they’ve created a race to the bottom on price. Unfortunately, the race to the bottom on quality has followed, and the rock bottom prices you get in year one inevitably turn into the much higher prices in year two and beyond (so-called dual pricing).

It’s a hot topic at the moment as Citizens Advice recently launched a super-complaint about the issue of dual pricing, and the FCA has launched its own market inquiry.

Aviva to the rescue?

But this week saw the first attempt by an insurer to get to grips with some of these problems. As a seasoned journalist and campaigner, I struggle not to be cynical when insurers announce grand new initiatives. But the launch of Aviva Plus this week has genuinely impressed me.

Aviva Plus offers car or home insurance for a monthly subscription. There’s no cancellation fees, no administration fees, and no interest for paying monthly. Aviva also guarantees that prices for existing customers will never differ from new customers.

The quote process has been impressively streamlined, with customers only left to answer a handful of questions and confirm a handful of statements (such as agreeing that you’re not a professional footballer!).

You’re then offered three tiers of cover – a bit like you are with travel insurance. And when you take out home insurance, travel cover is thrown in for free.

My first thought was that it would be massively uncompetitive on price, but actually it didn’t shape up too badly in the couple of quotes I did for myself. The excesses are pretty high – but you can lower them in return for an additional premium. And I like the idea of being able to choose different cover levels. It presents a much clearer way of choosing what you want and need than most insurers have today.

Fairer pricing

As well as dealing with the issue of dual pricing, one of the things I like most about the quote journey is that you’re not laid traps to step into. Aviva uses publicly available data to fill in the gaps. So there’s no questions about whether you live next to tall trees or rivers, and no questions about what you do for a living, where you were born or whether your house has certain types of locks on all its doors and windows.

When you’re asked about previous claims, you’re not asked to declare other incidents that didn’t result in a claim.

There’s certainly still room for improvement of course. The purchase journey is so slick that there’s no time taken to explain the limitations of what you’re buying. And the additional travel cover is not particularly high quality – but is added on with no explanations at all about what it doesn’t cover.

Nevertheless, these are things that can be fixed. Overall, it’s an impressive innovation – particularly coming from one of the biggest incumbents in the market. I hope it sets the cat amongst the pigeons and sets other insurers to offer something similar.